Working Group 12: Financing

THE PRE CONFERENCE OF BOLIVIAN INDIGINEOUS PEOPLES AND SOCIAL ORGANIZATIONS ON CLIMATE CHANGE AND THE RIGHTS OF MOTHER EARTH (PCPCCDT), emphasizes that there are funding commitments assumed by Annex 1 countries of the UN Framework Convention on Climate Change (UNFCCC) that come from these countries responsibility on their greenhouse gases historical emissions, which have caused climate change and its adverse effects, threatening the survival of Mother Earth and condemning millions of people to a poor and deprived life.

It emphasises the failure of the model implemented to accomplish the commitments to finance climate change costs in developing countries leading to a non-fulfilment by developed countries.

It stresses that the amount of financial and technological resources addressed so far to the funding commitment is minimal and inadequate in relation to what is actually needed in developing countries to tackle climate change.

It reasserts that carbon market is not a source of financing for developing countries given that it does not ensure:

an equitable distribution or a continuous flow of resources

a necessary scale of resources to fight climate crisis

a convenient availability or direct access to resources.

This has given rise to promote economic interests of a few at the expense of the greater good of the peoples of the World and the fast increase of climate change and its negative impacts.

It demands developed countries to comply with their financing commitments and the compensation of their historical climate debt to developing countries in defense of the Culture of Life and Mother Earth.

It demands the provision of new, additional, adequate and predictable financial resources from public source equivalent to a minimum of 6% of GDP from developed countries to ensure the availability, timeliness and adequacy of resources in a flexible and transparent way towards developing countries to cover the costs they incur in order to fight climate change.

It highlights that the implementation of a new and effective financial mechanism is required to ensure compliance with the commitments assumed by Annex 1 countries, referring to the financing of new and additional resources to cover costs incurred by developing countries to tackle climate change and allow the payment of historical climate debt.

This mechanism must operate under the authority and guidance of the Conference of Parties to the UNFCCC (COP) in order to ensure equality of sovereign countries when making decisions about the use of resources.

The mechanism should have an equitable presentation of the UNFCCC Parties, with a special participation of developing countries that are most affected by climate change without causing this problem.

The role of this mechanism should have advisory and operational functions, in a way that permits a dynamic and appropriate flow of resources to fight climate change in developing countries.

A binding Monitoring, Review and Verification system should be established in order to comply with funding commitments, according to the principle of common but differentiated responsibilities.

All financial resources managed within the financial mechanism fund, must come from developed countries, which assumed their respective commitments under the UNFCCC.

It requires the quantification of climate debt through the Climate Justice Tribunal.

It demands to strengthen, improve and streamline channels of bilateral and multilateral cooperation, to finance the costs involving climate change until the financial mechanism works effectively.

It stresses that the provision of these resources should be based on donations and subsidies, not on loans or carbon market, demanding direct access to them by developing countries because financing is an obligation of developed countries.

It rejects the pre-allocation of resources based on conditions and indicators developed outside the UNFCCC.

It demands that funds for militarism, war and arms build-up are re-directed to fight climate change, thus promoting the Culture of Life.

It rejects the process that is being followed to legitimize the document known as “Copenhagen Accord”, which is not a decision of the COP, but a document simply noticed in the Danish capital.

It emphasizes that the elements referred to funding contained in the “Copenhagen Accord” do not respond to the real needs of developing countries to tackle climate change. It rejects as well any attempt to stream financial resources to fight climate change through this document.

It demands to all UNFCCC Parties to seek compliance with the funding commitments of Annex 1 Parties, trough the ‘Route’ of the Bali Action Plan process under the UNFCCC and deplores other exclusivist and non-transparent processes outside the Convention already denounced in Copenhagen, which will not be recognized.

It emphasizes that financial resources used to accomplish funding commitments will be used for culture of life and in defense of the rights of Mother Earth.

1 comment

I am addressing myself to one of the three Objectives in terms of debate and product, i.e. “Agree on proposed institutional structure and functions of the funding mechanism”. This objective is expressed in three of the five Principal questions: How to ensure that these resources are stable and sustainable over time? What might be the structure of a new and efficient mechanism for the management and transfer of these resources? How can they be administered in a transparent, efficient, and sustainable way?
The working group presented a good overview of the multiplicity of funding mechanisms. It also showed how uncoordinated they are. What is needed is that these uncoordinated funding sources become part of an overall vision and an associated global agreement of financing for both mitigation and adaptation measures and development. Such agreement is necessarily to be one that is to be located within the umbrella of the United Nations and not under control of the IMF or World Bank which are trying hard to have that control.

To a great extent the funding vision for financing climate justice can be found in article 4 of the UNFCCC that the working group quoted in toto. What are needed are practical proposals for making that funding vision a reality.

During the last two years the International Institute of Monetary Transformation has developed the tri-partite Tierra Fee & Dividend system that could become a or the most important item for discussion in a proposed UN Commission on Monetary Transformation and the Climate Crisis. It is the establishment of this UN Commission on Monetary Transformation and the Climate Crisis that I present as a practical proposal for the April CMPCC Conference to be submitted to the UNFCCC in Cancun in December of this year and, if necessary, to the Rio 2012 Earth Summit.

One of the main reasons in the development of the Tierra Fee & Dividend system was the need to have an institutional mechanism to have ecological debtor countries in the global North transfer their ecological or climate debt to ecological creditor countries in the global South. This is made possible in the Tierra Fee & Dividend system by having nations decide to create carbon accounts in their balance of payments. Like in the rebalancing of global financial imbalances, this modified balance of payments system would rebalance global ecological imbalances. This updated balance of payments is part of a monetary architecture that is based upon a carbon standard. This de-carbonization monetary standard would function in the same way as the gold standard of old.

This transformed international monetary system with its balance of payments, its carbon standard would operate first in its global reserve system where the carbon-based international reserve currency of the Tierra is its synthetic accounting unit in the same way as SDR is the synthetic accounting unit in the IMF. By the creation of the Tierra and its annual allocations based upon the adult population of a country countries in the developing world are freed from the prison of hard currency reserves such as US dollars which they have lend to the US for a pitiful interest rate of less than 1%. Millions of dollars would become available for mitigation and adaptation measures and development programs.

The second leg of the Tierra Fee & Dividend system is the Fee & Dividend system. Its carbon reduction methodology is opposed to the cap-and-trade approaches that are supported by the EU and the USA. The system’s main supporters are climatologist James Hansen (Chapter 9 in his 2009 book Storms of My Grandchildren, particularly pp 219-22), economist Komanoff of the Carbon Tax Center, legislators Van Hollen and Larsen of the US House of Representatives and most of the thousands of people who have chosen carbon taxes rather than carbon trading as their carbon reduction methodology. It can be demonstrated that it is an effective, fair and formidable carbon reduction methodology that can be implemented far quicker than its cap-and-trade counterpart.

A third component of the Tierra Fee & Dividend system which supports the earlier two, i.e. monetary and climate legs is the role of the public sector as the regulator and driver. As such nations can decide to establish the UN International Clearing Union to administer the Tierra as reserve currency and, later on, the UN Central Bank to administer the Tierra as vehicle currency. Both institutions would also monitor all financial flows, so that financial crises like the one of 2007-8 can be avoided.

It is to be noted that the Tierra Fee & Dividend system, both in terms of its monetary and climate dimensions, presents an equitable solution to both challenges. The two dimensions are also based upon a sustainability philosophy, called contextual sustainability that integrates social, economic and ecological dimensions in the context of values of social justice, active non-violence, futurity and participatory decision-making. These values are closely related the integrated social and ecological values of the Earth Charter

For more information, consult a somewhat similar response to the working groups on Debt (#8) and Action (#16) and http://www.timun.net and particularly its blog where the most recent developments are presented. Do not hesitate to write your comments and get on the IIMT mailing list. At the end of the summer my book entitled The Tierra Fee & Dividend System: A Monetary Approach to Dealing with the Climate Crisis is planned to be published by Cosimo Publishing and become available in hard copy and electronic form.